Long-Term Bonds Usually Pay a Higher Interest Rate Than Do

question 26

True/False

Long-term bonds usually pay a higher interest rate than do short-term bonds because long-term bonds are riskier.

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Definitions:

Marginal Revenue Product

The additional revenue generated from using one more unit of a factor of production, holding all other factors constant.

Law of Diminishing Returns

This economic law states that after a certain point, successive increments of a single factor of production yield progressively smaller increases in output.

Competitive Market

A market environment where numerous producers and consumers interact, leading to price competition and variety in products.

Marginal Revenue Product

The additional revenue generated from employing one more unit of a resource, such as labor or capital, in the production process.